Home Prices Continue to Climb

S&P/Case-Shiller Home Price Index rose 4.1% in the 12 months ended in March

Home prices continued their unremitting climb in March, according to a report released on Tuesday, underscoring concerns of some economists over whether the strong price gains are sustainable.

The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.1% in the 12 months ended in March, slightly weaker than a 4.2% increase in February.

The 10-city and 20-city indexes saw similar year-over-year increases in March than in February. The 10-city index gained 4.7% from a year earlier, compared with 4.8% in February. The 20-city index gained 5% year-over-year, identical to the increase in February.

Economists surveyed by The Wall Street Journal expected a 4.9% increase in the 20-city index.

“Given the long stretch of strong reports, it is no surprise that people are asking if we’re in a new home price bubble. The only way you can be sure of a bubble is looking back after it’s over,” said David Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices.

Mr. Blitzer said that historically home prices typically rise 1% a year, compared with the current 4.1% pace. But he noted that the annual rate of increase halved in the last year, suggesting that home-price growth is moderating.

“I would describe this as a rebound in home prices, not bubble and not a reason to be fearful,” he said.

Hot tech cities continued to see huge price increases, including San Francisco, where prices increased 10.3% and Denver, where they increased 10% year-over-year. Despite fears that the fall in oil prices would hurt the Texas housing market, Dallas posted 9.3% year-over-year gains.

Month-over-month home prices also saw significant gains, according to the report. Not seasonally adjusted, the U.S. index rose 0.8% from February to March. The 10-city index saw a 0.8% month-over-month gain and 20-city indexes saw a 0.9% increase over the month.

Seasonally adjusted, the 10-city index rose 0.9% in March from February and the 20-city index rose 1%. The national index rose 0.1% in March.

Home-price growth has been moderating across the country in 2015 after large gains in the prior couple of years coming out of the recession.

“I’d say that home values are increasing but the pace of the increase is moderating. They’re coming back down to reality,” said Svenja Gudell, senior director of economic research, at Zillow.

Still, some economists said that they are concerned that prices are continuing to rise out of step with buyers incomes. Sales of previously owned homes fell 3.3% in April from March to a seasonally adjusted annual rate of 5.04 million, the National Association of Realtors said last Thursday.

The Realtors association’s chief economist, Lawrence Yun, said that the lack of supply was driving up prices and dampening buyers’ enthusiasm.